Washington pressures states to expand Medicaid under health-care law

By By Noam N. Levey
Tribune Washington Bureau (MCT)

Published: Monday, Dec. 10 2012 12:00 a.m. MST

WASHINGTON — The Obama administration stepped up pressure on states Monday to guarantee health insurance for all their low-income residents in 2014 under the Affordable Care Act, warning governors that the federal government will not pick up the total cost of expanding coverage only partially.

“We continue to encourage all states to fully expand their Medicaid programs and take advantage of the generous federal matching funds to cover more of their residents,” Secretary of Health and Human Services Kathleen Sebelius wrote in a letter to governors.

But Sebelius indicated that governors who do not open their Medicaid programs to all eligible low-income residents will forfeit some of the federal aid promised by the health-care law.

“The law does not provide for a phased-in or partial expansion,” the Department of Health and Human Services said in guidance accompanying Sebelius’ letter.

Medicaid has become a major flashpoint in the implementation of the law since the U.S. Supreme Court ruled in June that states can decide whether to expand their Medicaid programs in 2014.

The law originally required the states to open Medicaid to all Americans who earn less than 138 percent of the federal poverty level, a major change for a program that now largely covers poor children and mothers.

To ease the expansion, the law initially provides full federal funding to cover the new population. Currently, Medicaid costs are split between state and federal governments.

Nonetheless, several Republican governors have said they won’t expand Medicaid, citing cost concerns. That prompted speculation that some states might partially expand Medicaid programs. But Obama administration officials said Monday the law does not authorize full federal funding for a more limited expansion.

A state that opens Medicaid to only some new low-income residents would qualify only for limited federal aid, requiring the state to come up with the rest of the money.

How the guidance will affect state decisions remains unclear. Alan Weil, president of the National Association for State Health Policy, said state leaders probably won’t make final decisions until they work out 2014 budgets next year. “A lot of what we have seen so far is posturing,” he said.

The Obama administration’s announcement drew quick criticism from the Republican Governors Association. “The Obama administration’s refusal to grant states more flexibility on Medicaid is as disheartening as it is short-sighted,” said Louisiana Gov. Bobby Jindal, the group’s chairman. Jindal has said he will not expand Medicaid in his state.

The administration’s move was applauded by the National Association of Public Hospitals and Health Systems, whose members care for millions of uninsured patients, often without compensation. Dr. Bruce Siegel, the association president, said it “takes an important step toward significantly reducing the ranks of the uninsured.”

The Obama administration is facing additional resistance from several Republican governors who have said they won’t set up insurance exchanges—a cornerstone of the law that will allow Americans who don’t get health-care benefits at work to shop for insurance plans that meet new minimum standards. The federal government can set up an exchange for states that refuse to do so.